Engaging the Underbanked and Unbanked in the U.S.

Engaging the Underbanked and Unbanked in the U.S.
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Who are the Unbanked and Underbanked?

Underbanked Population = Those U.S. consumers without a checking account
* The underbanked population is does not have checking account but the underbanked consumer tends to have other financial service products such as a savings account or a prepaid card.

Unbanked Polpulation = U.S. adult without any financial service product such as a checking or savings account

Underbanked Access Channels

63% of the underbanked population has access to broadband internet whereas 68% of underbanked consumers own a mobile phone therefore reaching the underbanked by mobile is ideal. Members of the underbanked population tend to use their mobile phones as a computer with 16% of the underbanked population owning a smartphones which is almost the same rate of all consumers in the U.S. who own a smartphone.

Mobile Prepaid is a Key Step to Banking the Underbanked

The underbanked population does not typically have a strong relationship with a financial institution if they have any. Most mobile financial services are used less by underbanked consumer, with a few exceptions one of those being mobile prepaid. The underbanked population seems to have an interest in prepaid with nearly one in five underbanked consumers using a prepaid or payroll card in the last 90 days.

Financial institutions should realize that prepaid mobile balance notifications can also build trust with their underbanked cardholders. The underbanked consumer are requesting balance inquiries prior to a transaction taking place to avoid declines or they are requesting mini-statements after a decline. Prepaid accounts can help the underbanked build a history of deposits and withdrawals and a regular payment record.  This is an opportunity for financial institutions to start to build a trusted relationship with the underbanked population, allowing the underbanked to deposit and transfer funds as well as pay bills and begin to establish a credit history.

Preview of Engaging the Underbanked and Unbanked in the US

Javelin's Take on the Engaging the Underbanked and Unbanked in the U.S.: How to Target the Growing Immigrant Population Through Mobile Financial Services

In Javelin’s most recent report: Engaging the Underbanked and Unbanked in the U.S.: How to Target the Growing Immigrant Population Through Mobile Financial Services, Javelin develops a calculated strategy for financial institutions (FIs) and telcos to develop a mutually beneficial and profitable mobile relationship with unbanked and underbanked consumers. Some key points addressed in Javelin's Engaging the Underbanked and Unbanked in the U.S. include:

• Who are the unbanked and the underbanked? How are they defined? How do they differ from other consumers?

• Annual dollar size of the remittance market

• Opportunities and threats for telcos and banks

• Mobile financial products and services that are attractive to the unbanked and underbanked, and how they should be structured

• Comparison of mobile adoption to online adoption among the unbanked and underbanked. Factors that are holding back the underbanked from adopting mobile banking

• Market model that provide the best infrastructure to attract the unbanked in developing countries



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